AP Survey: Bernanke surprised investors

“It is important to act sooner rather than later to head off financial excess and the risk of future inflation,” said John Ryding, an economist at RDQ Economics.

Still, Michael Hanson, U.S. economist at Bank of America Merrill Lynch, noted that Bernanke hasn’t signaled he’s alarmed about possible high inflation or asset bubbles. Rather, Bernanke stressed at a news conference Wednesday that the risks of an economic slowdown have declined since fall. He said the economic fundamentals “look a little better.”

“I’m skeptical that they would tell us that they’re more optimistic while in reality they’re actually more worried about bubbles,” Hanson said.

The inflation gauge the Fed monitors most closely has risen just 1 percent in the past 12 months. That’s well below the Fed’s target rate of 2 percent. When inflation falls too low, the Fed normally keeps rates low to try to boost prices.

As a result, some economists surveyed by the AP faulted Bernanke for signaling a likely end to ultra-low rates.

“There is no evidence of inflation anywhere,” said Dean Baker, co-director at the Center for Economic Policy and Research. “It is actually falling, not rising. … This is definitely a wrong-headed move by the Fed.”